The government borrowing was less than expected last year, despite spending heavily on helping with energy bills and facing higher borrowing costs.
Borrowing, the difference between spending and tax income, was estimated at £139.2bn in the year to 31 March. That was less than had been predicted and gives ministers “wiggle room” for possible tax cuts ahead of the next election, one analyst said.
The chancellor said the government was still borrowing “eye-watering sums”.
The UK Economy
The amount borrowed last year was equivalent to 5.5% of the value of the UK economy – the highest percentage since 2014, excluding the pandemic. However, the borrowing figure was lower than the £152bn predicted by the government’s forecaster, the Office for Budget Responsibility, at the time of the Budget last month.
The Office for National Statistics (ONS) said the government borrowed £21.5bn in March alone, the second-highest March figure since monthly records began in 1993.
Chancellor Jeremy Hunt said: “These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and [Vladimir] Putin’s energy crisis. We were right to do so because we have managed to keep unemployment at a near-record low and provided the average family more than £3,000 in cost-of-living support this year and last.”
However, he said the government had a “clear plan to get debt falling”.
The lower-than-expected borrowing for 2022-23 will give the chancellor “more wiggle room to cut taxes or raise spending ahead of the next general election”, said Ruth Gregory at Capital Economics.
Mr Hunt faces pressure from Conservative MPs to cut taxes before the next election, which is expected in 2024, while public sector workers’ unions are pushing for pay increases to offset the soaring cost of living.
Ms Gregory said that with the next election fast approaching, she “wouldn’t be at all surprised” to see giveaways in the Autumn Statement, following similar moves this spring. But she added: “With both parties likely to stick to current plans to bring down public debt as a share of GDP, a sizeable fiscal tightening will still be required after the election, whoever is in charge.”